Overfished Ocean Strategy: Powering Up Innovation for a Resource-Deprived World

More Praise for Overfished Ocean Strategy

"Amid the sea of dry sustainability books, Overfished Ocean Strategy is a forceful tide of cutting-edge business stories and essential facts brought vividly to life. Zhexembayeva writes with passion and experience about radical business strategies for a smarter, not just greener, world. She engages our senses and emotions to deliver the broad brushstrokes of what it will take to succeed in the future in business. A brilliant and refreshingly fast-paced read!"

—Chris Laszlo, Associate Professor of Organizational Behavior, Case Western Reserve University, and coauthor of Embedded Sustainability

"Overfished Ocean Strategy delivers five simple principles for transforming business, not just through the next generation of sustainability but through truly smart innovation. All those who want to create new market space while creating deeper meaning for themselves and customers need to read this book."

—Soren Kaplan, author of Leapfrogging and speaker, consultant, and entrepreneur

To bring three billion new middle-class consumers into the global economy will require a revolution in resource productivity in everything from farms to fisheries to factories. Zhexembayeva’s groundbreaking book provides a road map for turning resource scarcity—the ‘overfished ocean’—into a competitive advantage. She shows how forward-looking businesses are already doing this and explains how any business can do the same.

—Joel Makower, Executive Editor, GreenBiz Group, Inc., and author of Strategies for the Green Economy

This is the best sustainability business book of the decade, no question, because it is truly a business book—it’s not about sustainability as an add-on but the future of a sensational business model innovation. If you want to lead in the circular economy, inspire new sources of value, and consistently create uncontested market space, place this book at the core of your breakthrough performance agenda. ‘This is what I’ve been looking for for a long time’—that’s exactly what I think you are going to say when you read this stunning and special book.

—David L. Cooperrider, Fairmount Minerals Professor and Faculty Chair, Fowler Center for Sustainable Value, Weatherhead School of Management, Case Western Reserve University

If you are looking for a recipe against sustainability fatigue, this book is definitely an eye-opener. Dr. Nadya Zhexembayeva makes a clear analysis of the need for a real radical, disruptive innovative approach to cope with resource scarcity. She does not aim to offer quick fixes, but she does recommend a strong thinking framework. Her business examples are intriguing and hopeful. She definitely offers the sustainability debate a new meaning and businesses the appetite to consider new business models. Refreshing!

—Wilfried Grommen, Chief Technologist, Hewlett-Packard

A resource-depleting world such as the one we currently live in entails a radical shift toward new governing principles, innovative ideas, and creative mindsets. It means taking a step back from the traditional linear economy, where everything is consumed and subsequently wasted, and finding the ‘disruptive innovation’ (as the author skillfully names it) that transforms the line into a circle. This book provides the set of rules that will guide you in taking this leap of faith, while telling the inspiring stories of the ones who have already done so. As CEO of an oil and gas company that has placed ‘resourcefulness’ as the stepping-stone of its strategy, I strongly recommend this book as an absolute must-read for any business professional ready to embark on this challenging but rewarding journey.

—Mariana Gheorghe, CEO, OMV Petrom, and one of Fortune magazine’s Most Powerful Women: The International Power 50

This book gives us five clear principles for business strategies that make sense, bring hope, and stand a good chance of success. This is a book in the new paradigm: beyond the weighty responsibilities of sustainability, here we have practical guidance and clear examples of opportunity enough for every entrepreneur and corporate reformer. This is the strategy text for now!

—Jonathan Gosling, Professor of Leadership Studies, University of Exeter Business School, and coauthor of Nelson’s Way

"What would happen if a smart researcher and businesswoman wrote a book on the broken state of our global economy and how to set it right? In the best case, the outcome would resemble the artful storytelling and crisp advice Nadya Zhexembayeva delivers us in Overfished Ocean Strategy. We need every person inside business and out to read Nadya’s book today. The good news: in doing so, readers will not only learn key principles for enabling a flourishing future but enjoy the process along the way. Kudos to Nadya for this fresh addition to the short list of truly hopeful and helpful guidebooks to the 21st century!"

—KoAnn Vikoren Skrzyniarz, founder and CEO, Sustainable Brands

"When the question is not if but when, our responses in past decades have been more like the ocean’s waves rather than tsunamis. Today, at the edge of the tipping point, businesses, shareholders, and governments need nothing less than the ‘Hitchhiker’s Guide to the New Reality.’ Some of the guidance we need is revealed here in this book. Nadya Zhexembayeva provides exquisite navigation through fundamental questions of meaning and of real needs, through the search beyond the boundaries of risk and of opportunities, and toward radical change. Enjoy the journey and hope to see you in the New Reality."

—Andreja Kodrin, founder and President, Challenge:Future

OVERFISHED OCEAN STRATEGY

NADYA ZHEXEMBAYEVA

OVERFISHED OCEAN STRATEGY

POWERING UP INNOVATION FOR

A RESOURCE-DEPRIVED WORLD

Overfished Ocean Strategy

Copyright © 2014 by Nadya Zhexembayeva

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed Attention: Permissions Coordinator, at the address below.

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First Edition

Hardcover print edition ISBN 978-1-60994-964-8

PDF e-book ISBN 978-1-60994-965-5

IDPF e-book ISBN 978-1-60994-966-2

2014-1

Cover Design: Wes Youssi, M80 Design

Interior design, illustration, and composition: Seventeenth Street Studios

Proofreader: Laurie Dunne

Indexer: Richard Evans

To the two most amazing Jernovois of my life:

Lila and Vladimir

Contents

Warm Greetings!

CHAPTER 1 Where Are the Fish? The New Competitive Reality

CHAPTER 2 Overfished Ocean Strategy: Five Principles That Make It Work

CHAPTER 3 Principle One: Line to Circle

CHAPTER 4 Principle Two: Vertical to Horizontal

CHAPTER 5 Principle Three: Growth to Growth

CHAPTER 6 Principle Four: Plan to Model

CHAPTER 7 Principle Five: Department to Mind-Set

CHAPTER 8 The Death of Green, or Is Your Marriage Sustainable?

CHAPTER 9 As a Means of Conclusion: What Should Business Do?

My Big Thanks

Notes

Index

About the Author

Warm Greetings!

Wherever these words find you today, I hope that there is a good cup of coffee or a heartwarming glass of wine at your side.

This is a selfish hope. We are here to explore a topic that is far from straightforward. And if you have not figured this out yet from any other readings on strategy, change, and sustainability, I am sure that by the end of this book I will have gotten you thoroughly confused. This is an essential part of my job.

I don’t mean it lightly. If I ask myself what my job is as an investor, as a manager, and definitely as an academic, my number one job is asking the right questions. And the job of asking the right questions means getting yourself constantly confused. Like many other people, I get so attached to one answer, grow so sure about the rightness of my own choice, that the need to ask any more profound questions disappears. But the change that the world faces right now requires deep questions. Believe me, we will all need that glass of wine!

THE ONLY WAY SOME of us exercise our minds is by jumping to conclusions.

CULLEN HIGHTOWER

WRITER

We live at a time of remarkable transformation. The linear throw-away economy of today—where we extract resources, process them, use them barely once, and trash them immediately as we would a cheap plastic fork—is coming to an end. We are, simply put, running out of things to mine and places to trash. And the market is beginning to recognize it as well: after an entire century of falling costs of raw materials, the first 10 years of the new millennium have seen a whopping 147 percent increase in real commodity prices.¹ Do you happen to be one of millions of managers fighting the ever-rising prices of raw materials, transportation, operations, and more? Welcome to the future!

Kyle Wiens, CEO of iFixit, the largest online repair community, and founder of the software company Dozuki, describes this transformation with laserlike precision: The economy is broken. It’s not because of partisan bickering or the debt ceiling. It’s not because there is too much government spending or too little, too many taxes or too few. The problem cuts much deeper than that; it’s systemic and it’s global. The economy is broken because the principles that make the marketplace thrive will eventually destroy it.²

A new economy is being born, one that takes the line and turns it into a circle. At the end of the life of a product, all of the waste comes back into a production cycle as a valuable resource, infinitely. With that comes a new economic order, where we compete and win using a radically new set of rules. For decades, companies claimed their victory by finding the best spot—a unique position on the crowded competitive landscape.³ Others strived to avoid the crowd by discovering a new market space—swimming into the blue ocean waters far away from shark-filled blood-red existing markets.⁴

But this old economic order is running its course. Whether red, blue, or rainbow, the oceans are getting empty, and those managers who deeply understand and master this shift are able to turn the new reality into disruptive innovation and remarkable competitive advantage. As they ride ahead of the wave, new products, new business models, new markets, and new profits follow. Overfished Ocean Strategy is for everyone who wants to survive and thrive in this new economy: people who are looking for new solutions to their managerial challenges, entrepreneurs and business leaders eager to protect their companies and get ahead of the wave, journalists and academics searching for a new level of discussion, educators interested in connecting the dots across disciplines and generations, nonprofit leaders trying to understand and engage with the new business world, and perhaps most important, young people around the world who will become the generation responsible for making the new world work.

All this talk about resource depletion might be making you yawn, cringe, and recall the recent green business craze. No doubt many of us suffer from sustainability fatigue. So let me make one thing perfectly clear: Pursuing the Overfished Ocean Strategy is a far cry from the sustainability efforts that result in green products that are (let’s be frank!) ugly, poorly perform, and are grossly overpriced. The world deprived of resources demands a far more radical change than apologetic compromises or PR nods to the environmentalists. The new era belongs to an entirely new set of approaches and competencies. It is time to leave bolt-on and Band-Aid forms of sustainability in the past and look into a future filled with change of remarkable magnitude—and promise.

In this book you will learn the new rules of the trade—five essential principles that are becoming increasingly more important for individuals and companies alike: (1) from line to circle, (2) from vertical to horizontal, (3) from growth to growth, (4) from plan to model, and (5) from department to mind-set. Together, these approaches inspire fundamental change and power up radical innovation across countries and industries—and my task is to make them work for you too.

A few remarks about the flow of this book. The five principles mentioned above lie at the center of the Overfished Ocean Strategy and thus will serve as the core of this story. As I am, first and foremost, a business owner and a manager, stories and cases make up the bulk of the discussion to serve as practical illustrations of how to make the principles work. At the end of the chapter for each of the five principles is a short list of tools and resources you might consider when building your own Overfished Ocean Strategy tool kit.

Yet to get to the principles themselves, we first must examine the big trends that are driving global economic transformation and setting the stage for the new rules of competition. Thus, we will first look at the oceans of disappearing resources, overflowing landfills, and new business ideas. Then, we will look at the death of green and ponder the sustainability of our marriages (that is no joke!). Real stories of real businesses will help us to navigate throughout. That is the plan.

I started working on this book at exactly 3:18 p.m. on a cold February afternoon in the winter of 2012, standing in front of a group of executives, ready for my strategy talk. The sun had started its descent, and the faces of the business leaders in front of me seemed to be in perfect harmony with the expanse of snow outside the window: cold and motionless. My challenge was simple: to make the invisible visible. The good news was that the journey of discovery had much to offer to the strong minds there in front of me: bankers, car manufacturers, pharmaceutical stars, and traders. While most of the world (including the leaders in my room) remains in the dark, Microsoft is researching a way to turn data servers into residential furnaces—saving millions on cooling off data centers while providing a crucial utility to homes across the world. FLOOW2 is making money by allowing businesses to sell their temporary overcapacity—underutilized machines, skills, and real estate—all with the click of a button. Puma is getting rid of shoe boxes in favor of the remarkable intelligence of the light and reusable Clever Little Bag, while BMW has stopped selling cars and is now selling mobility, electricity included. In Peru, the first billboard that converts air into drinkable water has gone up, while in the Netherlands, wasteful party confetti biodegrades and grows into wild-flowers. It was my job to tell these stories—and share the secrets of innovation that make each of them work. So off I went: We live amid remarkable—though largely undetected—transformation

Whether these pages find you on a sunny summer day or a cold winter afternoon, my task is still the same. This book is here to make the new competitive reality visible—and to share the best examples of radical innovation for the resource-deprived world. I am deeply thankful to all the executives and businesses that have been my partners for over